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A "very high" air pollution warning has been issued for London for the first time under a new alert system.

Fields of gold: Australia's wheat industry contributes more than A$5 billion to the economy each year. Wheat image from www.shutterstock.com

Australia’s wheat yields more than trebled during the first 90 years of the 20th century but have stalled since 1990. In research published today in Global Change Biology, we show that rising temperatures and reduced rainfall, in line with global climate change, are responsible for the shortfall.

This is a major concern for wheat farmers, the Australian economy and global food security as the climate continues to change. The wheat industry is typically worth more than A$5 billion per year – Australia’s most valuable crop. Globally, food production needs to increase by at least 60% by 2050, and Australia is one of the world’s biggest wheat exporters.

There is some good news, though. So far, despite poorer conditions for growing wheat, farmers have managed to improve farming practices and at least stabilise yields. The question is how long they can continue to do so.

Worsening weather

While wheat yields have been largely the same over the 26 years from 1990 to 2015, potential yields have declined by 27% since 1990, from 4.4 tonnes per hectare to 3.2 tonnes per hectare.

Potential yields are the limit on what a wheat field can produce. This is determined by weather, soil type, the genetic potential of the best adapted wheat varieties and sustainable best practice. Farmers’ actual yields are further restricted by economic considerations, attitude to risk, knowledge and other socio-economic factors.

While yield potential has declined overall, the trend has not been evenly distributed. While some areas have not suffered any decline, others have declined by up to 100kg per hectare each year.

We found this decline in yield potential by investigating 50 high-quality weather stations located throughout Australia’s wheat-growing areas.

Analysis of the weather data revealed that, on average, the amount of rain falling on growing crops declined by 2.8mm per season, or 28% over 26 years, while maximum daily temperatures increased by an average of 1.05℃.

To calculate the impact of these climate trends on potential wheat yields we applied a crop simulation model, APSIM, which has been thoroughly validated against field experiments in Australia, to the 50 weather stations.

Climate variability or climate change?

There is strong evidence globally that increasing greenhouse gases are causing rises in temperature.

Recent studies have also attributed observed rainfall trends in our study region to anthropogenic climate change.

Statistically, the chance of observing the decline in yield potential over 50 weather stations and 26 years through random variability is less than one in 100 billion.

We can also separate the individual impacts of rainfall decline, temperature rise and more CO₂ in the atmosphere (all else being equal, rising atmospheric CO₂ means more plant growth).

First, we statistically removed the rising temperature trends from the daily temperature records and re-ran the simulations. This showed that lower rainfall accounted for 83% of the decline in yield potential, while temperature rise alone was responsible for 17% of the decline.

Next we re-ran our simulations with climate records, keeping CO₂ at 1990 levels. The CO₂ enrichment effect, whereby crop growth benefits from higher atmospheric CO₂ levels, prevented a further 4% decline relative to 1990 yields.

So the rising CO₂ levels provided a small benefit compared to the combined impact of rainfall and temperature trends.

Closing the yield gap

Why then have actual yields remained steady when yield potential has declined by 27%? Here it is important to understand the concept of yield gaps, the difference between potential yields and farmers’ actual yields.

An earlier study showed that between 1996 and 2010 Australia’s wheat growers achieved 49% of their yield potential – so there was a 51% “yield gap” between what the fields could potentially produce and what farmers actually harvested.

Averaged out over a number of seasons, Australia’s most productive farmers achieve about 80% of their yield potential. Globally, this is considered to be the ceiling for many crops.

Wheat farmers are closing the yield gap. From harvesting 38% of potential yields in 1990 this increased to 55% by 2015. This is why, despite the decrease in yield potential, actual yields have been stable.

Impressively, wheat growers have adopted advances in technology and adapted them to their needs. They have adopted improved varieties as well as improved practices, including reduced cultivation (or “tillage”) of their land, controlled traffic to reduce soil compaction, integrated weed management and seasonally targeted fertiliser use. This has enabled them to keep pace with an increasingly challenging climate.

What about the future?

Let’s assume that the climate trend observed over the past 26 years continues at the same rate during the next 26 years, and that farmers continue to close the yield gap so that all farmers reach 80% of yield potential.

If this happens, we calculate that the national wheat yield will fall from the recent average of 1.74 tonnes per hectare to 1.55 tonnes per hectare in 2041. Such a future would be challenging for wheat producers, especially in more marginal areas with higher rates of decline in yield potential.

While total wheat production and therefore exports under this scenario will decrease, Australia can continue to contribute to future global food security through its agricultural research and development.

Zvi Hochman receives funding from Grains Research and Development Corporation (GRDC) and the National Australia Bank. He is a board director of Birchip Cropping Group Inc. (BCG) a not-for-profit agricultural research and extension organisation led by farmers from the Wimmera and Mallee regions of Victoria.

David Gobbett receives funding from the Grains Research and Development Corporation (GRDC), Sugar Research Australia (SRA), and Wine Australia through the Department of Agriculture and Water Resources Rural R&D for Profit Programme.

Heidi Horan receives funding from the Grains Research and Development Corporation (GRDC) and National Australia Bank.

Will 2017 be the year Australia sorts out its energy policy? Power image from www.shutterstock.com

2017 is the year when many long-festering energy policy problems must be addressed. Our outdated energy market model is falling apart. The gas industry is lining its pockets at the expense of Australian industry. Climate policy is urgent, but controversial among key decision-makers. Our fossil fuel exports are under threat from global forces.

The objectives are clear: provide reliable, affordable and low-carbon energy services to households and business, and build a sustainable energy export sector.

The problem is that there is little agreement on how we interpret and frame these goals, let alone how to achieve them. Some see threat where others see opportunity. Powerful interests are keen to protect their investments. Meanwhile diverse competitors are emerging from many directions and consumers clamour for equity, rights, affordability and choice.

These debates are set in a context of Chief Scientist Alan Finkel’s review of the sector, a federal review of climate policy, and debate about extending the Renewable Energy Target.

Australian business is calling for certainty in energy and climate policy: that’s one thing they can’t be certain they’ll get this year. But there will be some useful groundwork.

Into the jungle

The energy and environment minister, Josh Frydenberg, has criticised state governments for introducing uncoordinated and overly aggressive renewable energy policies.

He is seeking “harmonisation”, which is code for capping growth of renewable energy, as he and his prime minister struggle to satisfy the rampant extreme right within their party.

But state governments know supporting renewable energy is a vote winner. The economics and climate pressures are shifting in favour of renewable energy.

The ACT’s “contracts for difference” auction approach to renewables has reduced risk for project proponents while delivering low-cost renewable energy projects additional to the RET, and delivering ambitious climate targets. Others are copying.

The problem for the minister is that the nature of the energy sector has changed from a centralised, top-down, slowly changing system dominated by big businesses, governments and large investments to a chaotic, decentralised, diverse and rapidly changing jungle.

Even if state governments could be brought into line, local governments, the private sector, households and community groups will pursue their agendas. Competitive democracy is at work.

So we may see a rethink of the design and operation of energy markets in 2017. Governments will focus on reliability, energy security, consumer rights and providing fair access for emerging competitors balanced by higher expectations.

Reliable supply

Debates in the wake of the Basslink failure and South Australia’s blackout suggest that few politicians, industry participants and commentators have a comprehensive understanding of the fundamentals of delivering reliable and secure energy services in a modern world.

But it’s not just about having enough well-maintained energy supply. We can now manage demand by using energy more efficiently, actively managing demand, and storing energy.

We can then use a mix of supply-side options to satisfy this demand. For instance, we can install storage in regional pumped hydro dams and at solar thermal generators. We can transport electricity via batteries in electric vehicles instead of power lines.

We must face new challenges, such as increasingly extreme weather events and bushfire risks from power lines, without disrupting consumers. And consumer rights must be protected when they may have equipment and services provided by multiple energy businesses.

So appliance manufacturers, distributed energy and storage providers will need to incorporate new features into their products and meet tougher performance standards, to play their part in maintaining system reliability and security.

In return, governments will have to open up access to the electricity market and encourage investment in a smarter, distributed energy system.

2017 is the year when a new framework for our electricity service system must be designed.

Reducing demand

Australian policymakers seem to have a blind spot on energy efficiency. Energy efficiency plays a key role in managing electricity demand. For example, energy efficiency didn’t appear to rate a mention following the South Australian blackout. The draft Finkel Review focuses on supplying electricity, mentioning energy efficiency ten times, but only in passing.

Yet the International Energy Agency describes energy efficiency as “the first fuel” – cutting demand is the same as building more supply, and cheaper. It could make the biggest contribution to cutting fossil fuel carbon emissions out to 2030.

Research by many groups such as Climateworks and Beyond Zero Emissions has shown that many energy efficiency measures actually save money while cutting carbon emissions, so have a “negative” carbon cost.

Despite ongoing analysis and adjustment, energy efficiency and demand management have not captured significant roles in the National Electricity Market. The National Electricity Objective, which sets the overall focus of the electricity market, focuses on the price of electricity that consumers pay, not the total cost of delivering energy services (which should include carbon). This undermines focus on actions that reduce the amount of energy needed.

Among the original 1992 draft objectives in the National Grid Management Protocol was:

To provide a framework for long-term least-cost solutions to meet future power supply demands including appropriate use of demand management

Our electricity market could have been a very different creature.

The National Energy Productivity Plan is a positive step forward. But it is poorly funded (A$18 million was allocated by COAG) and has vague governance. Yet it is supposed to deliver a large chunk of our 2030 emissions reduction target.

As with renewable energy, states and territories are filling the vacuum.

There is also emerging support for the concept of energy productivity. This goes beyond energy efficiency and aims to deliver more economic value from each unit of energy consumed. The Australian Association for Energy Productivity and Climateworks have published major reports on doubling energy productivity by 2030, while A2EP has worked with business to develop sector roadmaps and an “innovation scan”.

A much stronger focus on improving energy productivity may well be an outcome of the climate review. If so, it will play a significant role in reshaping our energy future. But it will require strong leadership, cultural change and policy intervention beyond past levels.

Keeping prices under control

Energy markets are failing to deliver on their objective of low prices, reliability and protection of the “long-term interests of consumers”. It is increasingly clear that emerging nimble technologies and business models are outflanking traditional structures. 2017 seems to be the year it is coming to a head.

Gas prices have been driven up by failure to manage impacts of a tripling of east coast gas demand from three Queensland LNG export plants. Industrial gas users are struggling to secure reasonably priced, long-term contracts.

The high gas prices and shortages at winter peak times have driven up electricity prices. In the wholesale electricity market, the highest bidder sets the price for all power stations.

So if that’s an expensive gas generator, all generators are paid handsome prices, regardless of how much it costs them to generate electricity. Over time, these prices flow over into electricity bills.

The solution for gas is not necessarily more gas supply. Decades of low gas prices have meant that Australian industry and households use gas very inefficiently, so there is substantial scope to save gas.

There is increasing potential to switch from gas to electricity and renewable fuels. Regional gas storage (or electricity storage) could reduce peak gas demand, reducing price spikes.

In any case, our gas industry seems to lack a social licence to increase gas production from coal seams, and we will need to cut fossil gas demand to meet our medium-term climate targets.

2017 is looking like a busy and challenging year across the energy sector.

Alan Pears has worked for government, business, industry associations public interest groups and at universities on energy efficiency, climate response and sustainability issues since the late 1970s. He is now an honorary Senior Industry Fellow at RMIT University and a consultant, as well as an adviser to a range of industry associations and public interest groups. His investments in managed funds include firms that benefit from growth in clean energy.

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